Winding-up petitions against restaurants increase 165%, with further surge expected

By James McAllister

- Last updated on GMT

Winding-up petitions against restaurants increase 165% with further surge expected Coronavirus crisis

Related tags: Coronavirus, Landlord, Rent, Government

The number of winding-up petitions issued against restaurants has jumped by 165% so far in 2020, with a second surge expected in the coming months.

According to accountancy firm UHY Hacker Young, 53 petitions were filed up to 20 April 2020, compared to 20 during the same period in 2019. 

At present a temporary ban on winding up petitions is in place​ to help protect any commercial tenants who are feeling the pressure from landlords pursuing aggressive forms of rent recovery while they remain closed as a result of the Coronavirus pandemic. 

However, UHY Hacker Young says that there is likely to be another significant rise in winding up petitions once the ban ends on June 30.

The firm adds that this jump in petitions only reflects the very earliest stages of the crisis, when a drop in high street footfall saw some already-underperforming restaurant businesses fall into insolvency.

It suggests many restaurants have managed to hold on so far by furloughing staff, and not buying stock to cut costs.

However, Peter Kubik, partner at UHY Hacker Young, says a lot of those restaurants will struggle to stay in business when the Coronavirus lockdown ends and costs return to their normal levels.

“The recent jump in winding up petitions against restaurants is unlikely to be the biggest increase we see this year,” he says. 

“Once lockdown measures are relaxed and the new temporary ban on winding up orders ends, a lot of restaurants will struggle to stay afloat for long.”

“Restaurants will have an extremely small window to get customers back through the door before restart costs deplete cash and send them into insolvency. They are especially at risk being one of the last sectors to return to normal activity.”

It comes as trade body UKHospitality urges the Government to intervene in the stalemate between landlords and hospitality business tenants​, over rent payment disputes.  

In a letter to the Business Secretary, Alok Sharma, UKHospitality has warned that, without intervention, there will be wide scale job losses and business failures in the coming months, adding that despite an announced moratorium on enforcement action, hospitality businesses are still being aggressively pursued by a minority of landlords.

Echoing the calls of London Union's Jonathan Downey, the letter says "it’s clear we need a National Time Out​ on rent, as the vast majority of hospitality and leisure businesses will simply not be able to pay for the rest of the year".

Related topics: Business

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